Oil Investors See The Barrel Half Full as Crude Gains After Surprise Trump Win

Oil prices rose robustly in midday trading as investors after Americans decided that Donald Trump, who supports the growth of oil & gas production through reduced regulation, will be the 45th President of the United States.

The rising oil prices energized the energy sector during the midday trading session, even after the U.S. Energy Information Administration reported a rise in crude oil inventories. Stockpiles increased by 2.4 million barrels for the week ending Nov. 4, keeping inventories, which now stand at 485 million barrels, at the "upper limit of the average range for this time of year."

Refinery inputs averaged approximately 15.8 million barrels per day, an increase of 369,000 barrels a day more than the prior week. Refineries also operated at 87.1% of the operable capacity.

As for gasoline production, it increased to an average of about 10.5 million barrels per day. Yet, inventories decreased by 2.8 million barrels last week and are still "well above the upper limit of the average range."

Distillate fuel production also rose last week to 4.8 million barrels per day as inventories declined by 1.9 million barrels.

Even though oil prices rebounded, the stock market was in sell-off mode. Strategists at Deutsche Bank think the market will-off "will be short lived," and that the Republican sweep is positive for the broad market. However, they also say one sector could suffer from this election: Energy.

"We think a greater U.S. oil supply outlook weighs on the oil price recovery," the Deutsche Bank strategists wrote in a research note Wednesday.

Similarly, J.P. Morgan equity strategist Mislav Matejka says there are elements to the Republican's platform that are "modestly negative for oil prices" over the medium term.

"Trump supports the growth of oil & gas production through reduced regulation, though some argue that commodity prices (and not regulation) will drive activity," Matejka wrote in a research note ­­­­­on Wednesday.

Meanwhile, the Coker Palmer Institutional equity research team believes that "we might hear some bullish crude oil thoughts, ranging from 'a return of Iran sanctions' to 'a tariff on crude imports to help spur U.S. energy independence' to a vague 'regulatory relief' on drillers and refiners."

While Trump has yet to enact any of the policies from his platform, domestic crude stockpiles are still at record levels, which has crippled oil prices. The U.S. Energy Information Administration will release its weekly supply report at 10:30 a.m. Wednesday.

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